FAQ: Value-Based Arrangements

We often hear that value-based health care is the future. But what are value-based payment arrangements? Why do we
need them? What benefits do they provide? Let’s explore through top frequently asked questions.

What are value-based arrangements?

Value-based arrangements link reimbursement for health care services and products to specific outcomes. These
outcomes, which can include measurements (e.g., lab test results) or milestones (e.g., completing a full treatment
regimen), vary based on the specific product or service.

For example, in an arrangement between a health insurer and a pharmaceutical manufacturer, the insurer would
reimburse the manufacturer based on how well patients met the predetermined outcomes. If patients did not meet the
predetermined outcome(s) (e.g., did not achieve certain levels in a lab test), then the manufacturer gets
reimbursed less than if patients did meet the outcome(s).

Why am I hearing more about these arrangements?

Traditionally, health care services and products, like medicines, have been paid for based on the volume sold, also
known as “fee for service.” However, as health care costs and rates
of chronic disease continue to rise, there has been increased urgency to deliver care that emphasizes
outcomes over volume. That’s how the need for value-based payment arrangements emerged.

How might I benefit from value-based arrangements?

In many cases, value-based payment arrangements improve access to a drug for eligible patients. And given medicines
in these arrangements are generally made available based on how well they work in specific sub-populations,
patients can get care that is more personalized. Sometimes, patients enjoy reduced cost-sharing in these
arrangements as well. And over the long term, the results innovators learn from these arrangements can help inform
and improve future research and development efforts.

For more on Lilly’s solutions-driven work in this area, visit our Value-Based Arrangements sections
on LillyPad and Lilly.com.